Quality Management Subsystems and their Impact on Business Competitiveness

The paper presents an analysis of the theory and methodology of quality management. A model of quality management subsystems is presented and some of its elements are discussed in relation to its influence on the competitiveness of Lithuanian business. Special attention is given to new aspects of quality assessment, social quality in particular. The fundamental elements of these qualities are also presented. The author conducted surveys of Lithuanian businesses and consumers and has used the obtained data to formulate and test the model and to interpret its elements.


Introduction
The integration of the world's economy and the resultant growth in competition have made quality one of the most important factors in an organisation's survival and success. The European Union's (EU) Quality Promotion Policy considers quality to be the main strategic instrument in European organisational activity (A European ... , 2000). In 2000, the European Quality Organisation announced the European Vision of Quality focused especiallyon the new perspectives in quality formation, in which quality management should encompass not only the technological and economic aspects of product and service quality, but also incorporate both the unique and the universally accepted activities undertaken by social, environmental and other organisations (Towards ... , 2000;Slatkeviciene et al., 2005). The partnership among business, state institutions and community organisations is equally important in ensuring a certain standard of quality.
The aim ofthis study is to highlight the subsystems related to quality management, to reveal their content, to educe the components of a new aspect of quality -social quality, using the data on Lithuanian businesses collected by the author to validate the relevance of the quality subsystems model.

Methodology
The paper refers to scientific, normative and legal literature, as well as to the logical analysis of economic activity and generalisations based on theoretical and methodological assump-tions, systemised business practices, and the results of the author's systemised research on quality-related problems. The research covered the following areas: assessment of statebacked and prioritised areas in quality; image formation of national products; the motivation behind and the effectiveness of the implementation of quality and environmental management systems; analysis of the problems encountered in the environmental certification and labelling of products and consumer awareness of quality indicators, research on the impact of the comparative testing of product quality on the market and consumers' interests. A detailed methodology for this research has been published (Ruzevicius et al., 2003;Ruzevicius, 2003;Ruzevicius et al., 2004;Ruievicius,2005).

The model of quality subsystems
Quality is a concept that cannot be measured on a time scale. Man's understanding of quality goes far back into prehistory, perhaps even a million years before the first tools were made (Makijovaite et al., 1998). For a long time quality assessment hinged predominantly on the quality of consumer products -their composition, attributes, distinguishing features, and so on. The rapid development of product manufacture and foreign trade led to the founding of one of the first disciplines in applied science in the 19th century -commodity science (merceologia in Italian, Warenwissenschaft, Warenkunde, Warenlehre in German). Quality has always been the main subject in commodity science. Eventually, this subject expanded until it encompassed not only consumer products but also materials, raw materials, business equipment, intellectual property, stan-78 dardisation, certification, certain aspects of a product's environmental and ecological quality, the protection of consumer's rights, the politics of consumerism and quality, etc.
Innovations in product technology, construction, composition, and the range in stock, as well as the globalisation of trade in recent decades necessitated the creation of a ~stem where product quality and safety could be guaranteed on a worldwide scale. It became impossibile by using the methods and means of classical commodity science alone. Gradually, commodity science branched off into independent areas of study, such as qualitologia, quality management, product and environmental management, qualimetria, the culture of quality, total quality management, quality management systems (ISO 9000, QS 9000, EMAS, ISO 14000, HACCp, GMp, OHSAS 18000 and others, Fig. 3), quality audits, sustainable development, etc.
The International Organisation for Standardisation , ISO, defines quality as an aggregate measure of the degree to which a product meets its needs (Quality, 2000). The author proposes a more detailed definition: quality is the aggregate of a product's features pending its suitability to meet the desired and foreseeable needs of the consumer pursuant to its purpose and terms of use. This defmition refers to the product's deficiencies as well as its impact on the natural environment. The concept of aproduct is rather expansive. International ISO standards define the product as a result of any action or process (Quality, 2000). A conceptual description of product may include commodities, services, raw materials, intellectual property, organisations, processes, systems, individuals as well as combinations of one or more of the above mentioned elements. In business, quality is often interpreted more narrowly -how a product's indicated attributes meet the set standards, regulations, specifications, laws and commercial contracts.
Integration processes in the world's economy and the growth of international trade have led to the internationalisation of quality processes, and quality remains one ofthe most decisive elements dictating a company's competitive ability. These processes increasingly use common methods, principles and criteria when formulating national and company quality politics and when creating international accreditation and quality certification systems and infrastructures in many countries. The formation of quality internationalisation processes is also being accelerated by the ever closer co-operation between the World Trade Organisation and other international quality, standardisation and certification institutions. In light of this, the European Quality Promotion Policy and quality politics have ensured EU industries a strategically important position in the 21st century (A European ... , 2000). This programme gives particular attention to training employees at all levels in quality awareness and assessment, as well as providing further training for quality management positions.
Lithuania must create and develop a competitive economy which can secure the welfare of its citizens if it wants to establish itself and remain an equal and respected member of the international community in the current world climate. Now that Lithuania is a member of the EU, the competitive ability of its national products and services will depend not only on the ability of individual organisations to safeguard quality, but on the combined efforts of all sectors of the economy and other state institutions.
Quality is important not only as a measure of how competitive a business is; it also determines the efficacy of state governance and other public sector organisations, the stability of a nation's economy, and the quality of life its citizens enjoy. This is why it is necessary to broaden our understanding of quality, so that other aspects (e.g., social) are also covered. The author's model of quality management subsystems is shown in Fig. 1.
While analysing the quality aspects of business competitiveness, the author proposes such subsystems related to the quality management as: 1. The value orientations of the society, government representatives, scientists and market participants. 2. Quality management systems, comparative testing of product quality and other. 3. Qualitative diversity of products. 4. Quality of product (commodities, services, intellectual property, processes ... ) and its environmental indicators. 5. Quality of economic management, organisational performance and business excellence. 6. Social quality. Hereinafter we are going to examine the content of a number of quality subsystems and their influence on the competitiveness of business. The results of the research on the impact of the comparative testing of product quality on the market and consumers' interests are presented in the publication of the author (Ruzevicius, 2005).

Social quality
In the currend period of our nation's full integration into the European economy, quality is of particular importance not only for traditional industries, businesses and service providers, but for the public economy as a whole, for the public sector as much as for effective ------ governance. That is why, in addition to the quality of products and services, the quality model also reflects other, wider dimensions in quality management, such as the quality of governance, public economy and social quality, the social responsibility of organisations, quality of education, quality of life, consumer satisfaction indicators, and so on. Social quality refers to the quality of government and public sector organisations, social equality, quality of life, the social responsibility of organisations, partnerships among business, state institutions and society, etc. The social responsibility of organisations refers to the system of attitudes, actions and means by which these organisations co-operate with interested third parties with respect to the integration and prioritisation of social interests, ethical norms and environmen-80 tal protection requirements. So far, social and life quality in Lithuania has not yet been systematically researched.

Quality of life
The World Health Organisation defines quality of life as an individual purpose-aligned cultural and value system by which a person lives, relative to his I her aims, hopes, living standards and interests. This is a detailed concept which incorporates an individual's physical and psychological health, degree of independence, social liaisons and relation to surroundings (Introducing ... , 2003). B. Haas has formulated the following description of quality of life: "Quality of life is each individual's personal, multi-faceted, current evaluation of their life situ-  ting ... , 1999). However, attention must also be given to an individual's subjective sense of being, to all subjective and objective criteria. Quality of life also depends on employment and work conditions in a given country, as well as on personal relationships. In addition, when describing and evaluating life quality we find that it is every individual's subjective opinion that is the most influential element and not the evaluation of one's welfare according to certain predetermined criteria. The author suggests an alternative definition of quality of li-fe. Quality of life is eac" individual's subjective gauge by which they evaluate their life encompassing their physical and psychological wellbeing, social and spilitual factors, their level of independence, and ties to the community. Quality of life is also determined by material status (the quality of one's home and contents, etc.), environmental surrounds and the development of the economy in relation to the exploitation of natural resources, community health, levels and quality of education, and the moral and psychological climate one finds oneself in (see Fig. 2).

Quality managemellt in state and public sectors
Initially, attempts to evaluate the organisational performance of the public sector were centred on the assessment of value for money. More recently, performance management has been associated with the achievement of established standards and the audit of organisational systems to ensure conformance. The implication of the latter approach is that it is more important to achieve the outcomes desired by stakeholders rather than becoming optimal-Iy efficient. It is a challenge for the public sector to attain both high customer satisfaction and stake holder satisfaction. For the private sector, quality is an important competitive advantage; in government, however, the incentive structure is such that political success is more important than quality-oriented management (Kouzmin et al., 1999). In Europe and other parts of the world, not only educational or health care institutions but also organisations of the state government sector implement quality management systems or apply total quality management methods and models to improve their performance. In Northern Ireland, the most compelling motivation for improving the service quality of the public sector dates back to the mid-1990s when the Head of the Northern Ireland Civil Service launched the programme of Continuous Improvement. Besides, a directive from the government was initiated that all public sector organizations should achieve the Investors in People standard by December 1999 (Hazlett et al., 2000).
In the public sector of the United Kingdom, various quality management models and methods initiated by the governmcnt such as Charter's Mark Award, Programme of Investment in People are used. Studies in organisations that have implemented the mentioned models in their activities showed that application of quality management principles and methods improved customer service and performance efficiency (by implementing the value for money principle) (SlatkeviCienc et al., 2005).
In order to improve the quality of state management and the administrative abilities of employees in the public sector. specifically formulated quality assessment programmes are needed. Similarly, quality management models and methods for the improvement and evaluation of the results of the activities carried out 82 by these institutions are also necessary. On 4 December 2001 the Government of Latvia passed the resolution concerning implementation of quality management systems in public administration (Reinholde, 2002).
The widespread acceptance and use of quality management methods hinges on society's willingness to embrace this concept and fully appreciate its benefits. Thus, the public needs to broaden its knowledge of issues relating to quality and environmental management, competitive ability, regional EU and innovation politics. the creation of civil society. the general social responsibility of organisations, etc.
The quality and image-formation of national products and services and the general improvement of the activities of organisations can only be secured through co-operation between the state and businesses, the state and society, and among businesses themselves. Fostering a good-natured agreement among consumers, employees and employers is also important. These co-operative efforts depend on the attitudes of state management institutions and initiatives that describe each party's specific mission, quality policy, self-awareness of their main product, indicators of its quality. and the expected consumers. The co-operation of state management and community organisations along with the guarantee of transparency and publicity of information creates a foundation on which the positive public opinion of the actions of state management organisations can be formed. Their contribution to the improvement of the quality of life of all members of society is then assured.

Quality ma1lagement systems
One of the most important recent developments in quality management, arising from globalisation, is the initiation of quality systems standardisation models and quality management in general, and the application of these initiatives in business and other fields (Ruzevi-<::ius et ai, 2004) (see Figs. 1 and 3). Quality systems models came about as a mechanism by which client-consumer relations could be regulated and are part of external quality management. The most important goal of creating quality systems is to prove to a potential client the ability of the business concerned to manage all factors that influence quality, and in this way guarantee that the quality of production will adequately meet the requirements. An effective quality system helps reduce outlays, increase a company's economic stability, competitive ability and prestige, widen its client base, better meet environmental protection requirements, and so on (see Fig. 3). The author's research revealed quality manage-Quality, success, competitiveness of the company Quality improvement programs (implementation in 6-24 months) Mandatory quality systems (HACCp l , GMp 2 , GDP) and others). (implementation in 6-12 months, usage -continuous) ment system areas needing improvement, of which the most crucial are the total lack or ineffectiveness of post-system client needs satisfaction evaluations and disorganised or uninitiated quality expense accountability data. Almost 40% of the Lithuanian businesses surveyed keep no record of outlays relating to quality, because there is a lack of information about the practical application of quality expenses, and no system to collect and process such data exists so far. The creation of a system to meet these needs is one of the most important undertakings required of management schools today. The inclusion of quality expense accounts in a company's financial records is one of the ways to quantitively evaluate the benefits of quality systems and quality management programmes and to ensure timely corrective and preventative measures. The measure of quality, success and competitiveness of the company can be, for example, a decrease in nonconformity products, an increa~e in labour productivity and sales volume, new markets conquered, etc. Growing concern expressed by society and businesses over a more balanced relationship between economic growth and environmental protection is evident in Lithuania and in the world at large. Almost half of the businesses snrveyed by the author, who have implemented the ISO 9001 quality management system, plan to create also environmental management systems. We recommend companies to create quality and environmental management systems that integrate ISO 9001:2000 and ISO 14001 and meet their standard requirements. This combination would facilitate a reduction in the amount of documentation required and allow a more effective use of funds which could be then allocated to the implementation, certification and maintenance of integrated system projects.
Quality systems meeting the ISO 9000 standards are implemented voluntarily, this is why the decision on its realisation is made solely by the company concerned. On the other hand, systems concerning food safety (HAeCP), good manufacturing practices (GMP) or good distribution practices (GDP) are mandatory for the companies that meet the established specifications. For companies that fit this profile. 1998 1999 2000 2001 it is recommended that they integrate voluntary and mandatory quality systems, as some of these systems' requirements arc similar. This is why it may be possible to prepare at least a basie programme that would appease the requirements of both systems without anyoverlap. The author's research showed that it is also possible to combine the ISO 9001 quality management and the OHSAS 18000 occupational health and safety systems. This would result in a significant reduction of the quality system initiation and maintenance costs. Eeo-management systems (such as ISO 14001 and EMAS) and the eco-labelling of products are considered to be voluntary. The development of these systems has been very rapid in Lithuania -twice as many enterprises introduce ISO 14001 systems every year (Fig.  4). For a description of the problems of implementing the eeo-management systems, sec Ruzevicios. 2003.
No improvement in the quality of national products and services is possible without a marked improvement in the activities of related organisations. This can happen with the use of quality management models and the implementation of various quality and environmcn- Growing concern expressed by society and businesses over a more balanced relationship between economic growth and environmental protection is evident in Lithuania and in the world at large. Almost half of the businesses surveyed by the author, who have implemented the ISO 9001 quality management system, plan to create also environmental management systems. We recommend companies to create quality and environmental management systems that integrate ISO 9001:2000 and ISO 14001 and meet their standard requirements. This combination would facilitate a reduction in the amount of documentation required and allow a more effective use offunds which could be then allocated to the implementation, certification and maintenance of integrated system projects.
Quality systems meeting the ISO 9000 standards are implemented voluntarily, this is why the decision on its realisation is made solely by the company concerned. On the other hand, systems concerning food safety (HACCP), good manufacturing practices (GMP) or good distribution practices (GDP) are mandatory for the companies that meet the established specifications. For companies that fit this profile, it is recommended that they integrate voluntary and mandatory quality systems, as some of these systems' requirements are similar. This is why it may be possible to prepare at least a basic programme that would appease the requirements of both systems without any overlap. The author's research showed that it is also possible to combine the ISO 9001 quality management and the OHSAS 18000 occupational health and safety systems. This would result in a significant reduction of the quality system initiation and maintenance costs.
Eeo-management systems (such as ISO 14001 and EMAS) and the eco-Iabellingofproducts are considered to be voluntary. The development of these systems has been very rapid in Lithuania -twice as many enterprises introduce ISO 14001 systems every year (Fig.  4). For a description of the problems of implementing the eeo-management systems, see RuzeviCius, 2003. No improvement in the quality of national products and services is possible without a marked improvement in the activities of related organisations. This can happen with the use of quality management models and the implementation of various quality and environmen-  (2004;Ruzevicius, 2003;Ruzevicius ct al., 2004). Quality managemcnt systcms are also necessary if Lithuanian products are to meet European quality standards and be marked with the Keymark label. At present, only about 600 of Lithuanian companies use certified quality management systems. In this respect, Lithuania lags far behind the leading countries. For example, in Great Britain almost half of all organisations have implemented quality management systems, and it is organisations from the public sector in particular where these systems are most widely implemented. There are 207 companies in Lithuania, or about 0.6 per cent of all companies, which use environmental management systems. Changes to public purchases laws are currently under consideration; an organisation shall have implemented quality and / or envi ronmental management systems if it is to remain competitive. lithuanian "Waler lily" ming next (Ruzevicius et al., 2003). That is why, when forming a successful image for Lithuanian products in foreign markets, it isimperative that organisations be encouraged to improve product quality and seek that they meet quality, safety and environmental protection requirements and receive certification to verify this. The author's research showed that Lithuanian products still lack the European quality Keymark labelling as well as other internationally recognised eco-labels, even though the European market is particularly open to "green products," as over 40% of consumers in the EU give priority to such items (Ruzevicius, 2003). In 2005, most (75 % ) of Lithuanian businesses surveyed by the author have claimed that eco-labelling of products influences export potentials, while over one third (39%) plan to introduce the eea-labelling of their products in the future (Fig. 5).

Certification of products and eco-labelling
The economic effectiveness of eea-labelling and the crucial increase of EL products sales depend on label recognition and the way consumers understand its meaning and value as stated above. The results of our investigation confirm that it is necessary to develop eco-education in our country, as only one in ten con-

Conclusions
The world's economic integration and stronger competition mean that quality is rapidly becoming one of the most important factors of an organisation's survival and success. The EU Quality Promotion Policy considers quality to be the main variable in deciding the strategies of European organisations. The European Organisation of Quality announced its European Vision of Quality where new approaches in quality formation are a major focusquality management should incorporate not only the technical and economic aspects of the quality of products and services, but also the unique and universally accepted areas of social, environmental and other activities.
The model of quality subsystems broadens the concept of quality management in such a way that the dimensions like quality of the state, public economy and social quality. general social responsibility of organisations, the quality of education, quality of life, consumer satisfaction indicators and others are incorporated. Quality of life is described as a measure of each individual's subjective evaluation of their own life, comprising physical and psychological health, social and spiritual factors, the level of independence and ties to the community. The author suggests an alternative description of quality of life. Quality of life is each individual's subjective gauge by which they evaluate their life, encompassing their physical and psychological weB-being, social and spiritual factors, their level of independence, and ties to the community. Quality of life is dependent on material status (quality of products, accommodation ... ), environmental surrounds and rates of natural resource exploitation in relation to economic development, community health, levels and quality of education, the moral psychological climate.
The research has shown that Lithuanian products are not yet labelled as meeting the European Keymark quality label, nor do they have any other internationally recognised ecofriendly labelling, even though green products have shown a great potential in the European market where over 40% of consumers choose to "go green". The majority (75%) of Lithuanian businesses surveyed claim that eco-Iabelling influences export growth, and over one third of these businesses plan to introduce ecolabelling of their products in the future.
To increase the use of environmentally harmless and eco-friendly products, consumer eco-education and eco-information programs need to be established on a regional scale, thus raising consumer's competency and ecological culture in society. Only an ecologicaBy competent consumer will become a competent and demanding buyer and force business representatives to work purposefully. Amendments to public purchases laws could make a significant contribution here by legitimising the obligation to possess certificates of quality management programmes, eco-management systems and product ecological quality labelling (ecolabels). Companies seeking to undertake public purchases can then evaluate these certificates as an advantage in the competition. A system of comparative testing of the quality of Lithuanian products should be created, with a constant monitoring of the consumer satisfaction indicators.
Image-formation and quality of Lithuanian national brands and the improvement of the quality of organisational activities can only be secured through co-operation between the state and businesses, the state and society, and among businesses themselves. Fostering a good-natured agreement among consumers, employees and employers is also important.
For these co-operative efforts to be successful, a combination of factors is important, namely, the attitudes expressed by state management institutions and their initiatives in